August 25, 2006

A name is worth a million dollars. Or several billion! Google has renamed itself Gu Ge in China. Why the name change? Simple.

1) Google is hard to spell for Chinese users.2) Google has no meaning in Chinese.

What is A GuGe?1) The name means Ancient Song which plays off of the name of Baidu (which comes from an ancient Chinese poem/song).2) GuGe is short - just 4 characters vs 5 characters for Baidu.3) GuGe is easier to spell - and can be spelled via pinyin.

Why is Google renaming itself in GuGe?Largely, Google has seen its marketshare frozen at 33% for the past year, while Baidu's market share rose to 57%. In ad-revenue, Google's share is 16% down from 23% a year ago. Similarly, Baidu's share of the search advertising market has grown to 50% up from 37% last year.

Why is Google behind?It is common to see Chinese companies succeed in China - just as American companies succeed in America - because they understand the local market better and have better connections. The Chinese government would prefer a local player to be successful. After all, information is a critical asset in the information age - a matter of national security.

Who are some of the other companies that have renamed themselves?Google isn't the only company to rename itself for Chinese users. eBay is named Eachnet (Happy Fun) in China. Amazon takes the name Joyo (Great Discount). And Yahoo - well, it's called Yahoo! But in Chinese it means Great Tiger. It's wonderful to see the localization.

Why Do American Internet Companies Change Their Names To Address The Chinese Interet Market?Mostly, it's because internet companies that try to run their Chinese operations from Silicon Valley fail. Silicon Valley is a microcosm of America. In order to address Chinese users, American companies need to be on the ground in China. Hiring local teams, bringing on local talent, acquiring local PR - these are all of the things that make for a successful China strategy.

Most of the companies that have tried to grow a Chinese Internet presence from Silicon Valley have been unsuccessful. Examples include Yahoo which bought Alibaba. And even ones that have acquired local companies have yet to bear fruit. Joyo. a leading etailer in China, is struggling, because prices for goods are so cheap in department stores and on the street that e-commerce companies can't compare on price and convenience. Another example is EachNet - part of eBay.

So, next time you see a name change, you know why - you know the rest of the story!